ALIGN TECHNOLOGY, INC. (ALGN): what the price requires
At today's price, ALIGN TECHNOLOGY, INC. (ALGN) is priced for today's economics sustained for ~9.5 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/ALGN
Headline
| Field | Value |
|---|---|
| Ticker | ALGN |
| Company | ALIGN TECHNOLOGY, INC. |
| Current price | $180.69/sh |
| Composition | Clear Aligner 80% / Systems and Services 20% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 8.9% |
| Operating margin today | 13.2% |
| Margin compression implied | -4.3pp |
| Must persist for | 9.5y |
| Multiple paid | 22x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 12.6% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.9 years.
Reconcile: at the x-ray's 9.3% required return this reads ~19.5%/yr; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | +0.48σ |
| cohort percentile (of 112 peers) | 53 |
| sustained it ~9.5 years at this level | 15% |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.64x | 5 | expensive |
| Earnings | 2.02x | 5 | expensive |
| Relative | 1.07x | 5 | expensive |
| Growth | 1.28x | 3 | expensive |
Families that justify the price: Relative Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $141.19 | 1.28x | yes | FCF base $0.6B, growth 3% (input: historical growth), terminal g 2.9%, WACC 9.1%, 5yr projection |
| DCF Exit Multiple | Growth | $166.33 | 1.09x | yes | Exit EV/EBITDA: 13.1x / 15.1x / 17.1x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $169.59 | 1.07x | yes | P/E 24x (static sector reference · 2026-04), scenarios: 20.2x / 24.0x / 27.8x (bear / base = reference held flat / bull), EV/EBITDA 16x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $64.90 | 2.78x | yes | BV/sh $57.94, ROE (TTM) 10.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $68.56 | 2.64x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $128.89 | 1.40x | yes | Rev $4.1B, growth 3% (input: historical growth; tapered), Terminal P/S: 2.7x / 3.2x / 3.7x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $71.40 | 2.53x | yes | EPS $5.95, growth 11% (input: historical EPS growth), PEG=2.83 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $89.31 | 2.02x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.69B × (1−24%) / WACC 9.1% → EPV (no growth) |
| Residual Income | Asset | $69.24 | 2.61x | yes | BV $57.94 + 5yr PV of (ROE (TTM) 10.4% − Kₑ 9.3%) × BV; BV grows 6.7%/yr |
| Graham Number | Asset | $88.07 | 2.05x | yes | √(22.5 × EPS $5.95 × BVPS $57.94) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $190.86 | 0.95x | yes | EBITDA $0.81B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $97.67 | 1.85x | yes | FCF $583.6M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $70.23 | 2.57x | yes | SBC-adj FCF $0.40B (FCF $0.58B − SBC $0.18B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $148.62 | 1.22x | yes | EPS $5.95 × (8.5 + 2×10.7%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $19.77 | 9.14x | yes | BV $57.94 × (ROIC 3.1% / WACC 9.1%) |
| P/Sales Sector | Relative | $228.77 | 0.79x | yes | Revenue $4.10B × sector P/S 4.0x |
| PEG Fair Value | Relative | $95.06 | 1.90x | yes | EPS $5.95 × (PEG 1.5 × growth 10.7% (input: historical EPS growth)) → PE 16.0x |
| Earnings Yield | Earnings | $64.32 | 2.81x | yes | EPS $5.95 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $1.1b |
| Net debt / NOPAT (after-tax) | -2.63x (net cash) |
| Net debt / operating income (pre-tax) | -1.99x (net cash) |
| Share count CAGR (buyback) | -2.5% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
Align has moved from a hypergrowth story to a mature, cash-rich compounder. First-quarter 2026 revenue rose 6.2 percent to $1.04 billion, with clear aligners up 7.4 percent, well off the old double-digit pace but steadily positive.
At $182.02 the stock trades near 21 times operating income, a moderate multiple for the category leader, with the blended methods landing near $106. The price embeds ceiling-level growth held for about nine years.
The balance sheet is a fortress, roughly $1.06 billion of net cash and no debt, funding a continued buyback. The risks are now external: tariffs, currency, and discretionary spending on orthodontics.
Bull Case
The way to frame Align today is as a company that has graduated from hypergrowth into a durable, cash-generative maturity, and the price has come down to meet that reality. The Invisalign clear-aligner business, about 80 percent of revenue, and the iTero scanner and digital-services segment that rounds it out, no longer grow at the explosive rates of a decade ago. First-quarter 2026 revenue rose 6.2 percent to $1.04 billion, with clear-aligner revenue up 7.4 percent to $856 million. That is mid-single-digit to high-single-digit growth, the profile of a market leader compounding steadily rather than a speculative growth bet, and the 21-times operating-income multiple reflects that more sober stage.
The moat that justifies the leadership position is real and is being reinforced. Align competes against "traditional orthodontic treatments that use wires and brackets and increasingly against clear aligner products" from other makers (FY2025 10-K, accession 0001097149-26-000014), but it owns the category brand, the largest installed base of iTero scanners, and an integrated digital platform that links scanning, treatment planning and manufacturing. The company is leaning into that with new digital tools previewed in 2026, the Invisalign Specifix Attachment System, an enhanced palatal expander, AI-enabled ClinCheck planning, and a direct-3D-printing pilot, all of which pull traditionally manual chairside procedures into Align's own platform and deepen the switching costs for dentists and orthodontists.
The financial profile fits the mature-compounder framing. Align holds roughly $1.06 billion of net cash with no debt, and it is returning capital, announcing a $200 million share repurchase alongside first-quarter results while the share count steadily shrinks. A debt-free category leader with a digital moat, a long runway in an underpenetrated global orthodontics market, and a buyback, trading at a moderate multiple after the growth reset, is exactly the kind of business whose steady forward economics the static asset and earnings frames understate.
Bear Case
The risks that matter most for Align now sit outside its control, in the regulatory, trade and macro environment that govern a global, discretionary medical-device business. Tariffs are a live and shifting headwind: after a February 2026 ruling that certain IEEPA tariffs were unlawful, Align is no longer subject to those but is now subject to new temporary tariffs under Section 122 of the Trade Act. A company that manufactures and ships internationally faces cost and pricing uncertainty from trade policy that can change quarter to quarter, and that it may not fully pass on to dentists and patients.
The demand side is genuinely discretionary, which is the structural sensitivity. Orthodontic treatment is largely a cash-pay, elective purchase, and the filing is explicit that utilization "will fluctuate from period to period due to a variety of factors, which may include seasonal trends in our business, consumer demand due to macroeconomic facto"rs (FY2025 10-K, accession 0001097149-26-000014). When household budgets tighten, patients defer or trade down on cosmetic dental work, which is exactly why Align's growth decelerated from its former pace. A consumer slowdown, especially internationally where much of the future growth is supposed to come from, would pressure case volumes directly.
Competition compounds the macro risk, and the valuation does not leave much room. Align warns that "the dental industry is experiencing immense and rapid digital transformation and we may be unable to compete with existing competitors and emerging" entrants (same filing), as patents expire and lower-priced aligners proliferate. At about 21 times operating income, the price still embeds ceiling-level growth held for roughly nine years, and the multiple sits in the upper half of the peer range; only about 16 percent of comparable companies sustained that pace over a window this long. The static asset and earnings methods value the business near $106, well below the price. If tariffs bite, if a consumer downturn hits volumes, or if competition erodes pricing, the premium that only the relative-multiple frame supports re-rates toward the static methods.
Valuation
The price decomposes as a moderate growth premium on a maturing leader. The relative-multiple frame justifies the $182.02 price (June 27, 2026), while the asset-based and earnings-power methods read it as expensive, and the blended central value across methods sits near $106. The gap is narrower than for the hypergrowth names in the sector, reflecting that Align now grows at a mid-to-high single-digit rate rather than the explosive pace of its earlier years.
Inverting the price, the market is paying about 21 times operating income, which implies operating growth held near the self-funding ceiling for roughly nine years. The near-term pace is within what Align has recently delivered, given first-quarter clear-aligner growth of 7.4 percent, so the rate is credible; the stretch is the duration, since only about 16 percent of comparable companies sustained ceiling-level growth that long, and the multiple already sits in the upper half of the peer range. The balance sheet is a clear positive, with roughly $1.06 billion of net cash, no debt, and a $200 million buyback that shrinks the share count and supports per-share growth. The investment case is a quality-compounder thesis at a fair-to-full price: the reward depends on Align defending its category leadership and digital moat, expanding internationally, and converting its new digital tools into durable mid-single-digit-plus growth. The risk is that discretionary demand, tariffs, or competition slow the volumes, at which point a 21-times multiple supported mainly by the growth frame has meaningful downside toward where the asset and earnings methods sit.
Catalysts
Clear-aligner volume is the central catalyst. First-quarter 2026 clear-aligner revenue grew 7.4 percent to $856 million on roughly 685,000 cases, and the quarterly case-volume trend, especially international growth and adoption among general-practitioner dentists, is the key signal of whether Align can sustain mid-to-high single-digit growth. The company reaffirmed its 2026 guidance alongside the first quarter.
New product and platform adoption is the second catalyst. Align previewed several digital tools in 2026, including the Invisalign Specifix Attachment System, an enhanced palatal expander, AI-enabled ClinCheck, and a direct-3D-printing pilot. Uptake of these tools, plus iTero scanner and exocad software growth, is what deepens the moat and supports pricing, so adoption metrics are worth tracking.
Tariffs, currency and consumer demand are the swing factors. Align is now subject to temporary Section 122 tariffs after the IEEPA tariffs were ruled unlawful, and as a global business it is exposed to currency and to discretionary, largely cash-pay orthodontic demand that softens in a downturn. Trade-policy changes, exchange-rate moves, and consumer spending trends are the external catalysts in either direction. Quarterly results and any change to guidance remain the main proof points on whether volume growth and margins are holding.
Peer Cohorts (Per Segment, With Filing Citations)
Clear Aligner / Systems and Services (reported)
- NVST (ENVISTA HOLDINGS CORPORATION)
- (no filing in the citation store)
- XRAY (DENTSPLY SIRONA Inc.)
- (no filing in the citation store)
- MMSI (MERIT MEDICAL SYSTEMS INC)
- (no filing in the citation store)
- SYK (STRYKER CORP)
- (no filing in the citation store)
- RMD (ResMed Inc.)
- (no filing in the citation store)
- ZBH (ZIMMER BIOMET HOLDINGS, INC.)
- (no filing in the citation store)
- LIVN (LivaNova PLC)
- (no filing in the citation store)
- HAE (HAEMONETICS CORPORATION)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.